Can JAK Inhibitors Challenge Biologics?: Johnson & Johnson (JNJ) and More

Market presence
Other than Pfizer, Jakafi/Jakavi from Novartis AG (ADR) (NYSE:NVS) is the only other approved JAK inhibitor for any indication (myelofibrosis). Both companies are exploring expanded indications for their first-in-class drugs, while others are pushing their own JAK inhibitors through the pipeline.

The most promising JAK inhibitor in development is Baricitinib from Eli Lilly & Co. (NYSE:LLY), which had a strong showing in a phase 2b study for rheumatoid arthritis late last year. However, it will likely be years before data is released from the planned phase 3 trial for the drug. For now, investors looking to get into the new class of drugs will have to settle for Pfizer or Novartis.

Foolish bottom line
Pfizer has the right to recoup research and development costs from Xeljanz, but I think it missed a strategic opportunity to attract the signatures of doctors away from costlier biologics. The price point has effectively turned the drug into a second-line treatment for patients that do not respond to biologics. That could change with time if it does not have any surprises in long-term safety and it is important for patients who fail biologic treatments to have other options, but investors are left wondering what could have been.

That hasn’t stopped several analysts from projecting over $2 billion in sales for Xeljanz by the end of the decade. But given the lack of major JAK inhibitors in development and the fact that their development trails more proven therapies such as Johnson & Johnson’s Stelara, it appears that biologics will continue to dominate immunology therapies. The industry will gradually build upon its current understanding of the new class of small molecules, but there are just too many biologics to push out of the way for them to be direct competitors en masse any time soon. Although, as Xeljanz shows, there is still opportunity for those that successfully get to the market.

The article Can JAK Inhibitors Challenge Biologics? originally appeared on Fool.com and is written by Maxx Chatsko.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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